Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Questions - Page 363: 23

Answer

Because the restricted cash is not used by Woodlawn Racetrack to meet current obligations, it should not be reported as a current asset but under investments or other assets.

Work Step by Step

Thus, although this item has cash in its label, it should not be reflected in liquidity measures, such as current ratios.
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